"Open" PTO policy

My company is considering moving to an Open time off policy, where there are no number of maximum days specified for employees, but instead managers are given discretion around approving time off (with the exception of extended leaves which fall under a separately policy).

This requires a high level of trust between managers and workers as well as a strong work ethic in the company, and it has proven to be very effective in many cases.

This is increasingly popular in the Austin area and in the hi-tech world (both of which we are a part)...

Does anyone have some sample descriptions/policies of how they have implemented a plan of this kind before?

Answers

This plan is a very big mistake. Manager discretion is a nightmare. Just because everyone is doing it, does not make it problem free. It just means no problem YET. Let me give you an example.

Manager A is an animal lover. Employee A's dog is sick. At their discretion, Manager A gives Employee A a day off to take care of the sick animal. Now let's look at Manager B that hates all animals. Employee B gets no day to care for the sick dog.

Sounds trivial? Now replace "dog" with "child" and you are looking at a law suit.

I agree with Regis above. Though many companies in silcone valley (Google, Facebook) have such policies I would not go there without talking to your labor attorney first. Ask them for a sample policy and see if they have one. They will more than likely talk you out of this concept.

The question is always: When some one is abusing a policy, is that a weakness of the policy or the person?

When you try to constantly modify the rules to account for an outlier you end up with a system like the US Tax code. Its so over regulated that you open yourself up to more liabilities than you close. Or you end up punishing those you didn't intend to.

No matter the policy, someone will exploit it. I think the manager should handle the individual instead of the policy. I am sure the right answer is somewhere inbetween. Structure is good, but so is flexibility.

I worked at one of these companies. There was no formal guideline and no accrual for the liability. Not sure how the auditors got comfortable with that. The company has a performance driven culture that limited the potential for significant abuse. They've had the policy in place for some time now, and it seems to be working for them.

This was the de-facto at every place I've worked in the past 20 years. I feel this marks a trend away from line workers, where you need someone at the register or the drill press at 8 am or you shut down, to knowledge workers where it is more about value delivered and less time-card-punched.

It does, to the points above, require active management, but in a good way. The manager is responsible for making sure the employee delivers. The employee is responsible for delivering. That neither have to care about the time involved, whether it gets done at home, on weekends, or the person is so good they can do a week's worth in a day...this is all good stuff.

The best way I've seen it done is simply to have a line in the manual that says "vacation / pto is subject to manager approval." That it. Pretty much no different than what is in a more standard agreement. You might consider similar with regards to hours, as in "normal hours are from 8 to 5" and throw in a caveat that the employee can arrange whatever schedule they want with the manager.

If you're running a hybrid system where you still define weeks off (sounds like you are not), then plan on paying that accrued time on their departure.

Note that I think this only works for Exempt employees. Non-Exempt has a much stronger legal requirement around structured management. Performance-driven Non-exempt is (imho) trouble waiting to happen. A good attorney may have an answer here, but I've not seen it.

My experience with abuse of the system is more from the manager point of view: not pushing their people to actually *take* a vacation, for example.

I agree with much of what is said above. Most places work the same policy you are speaking of from another angle. They have a documented PTO policy structure, but it is up to the manager to enforce it. This avoids some of the issue being stated above, and allows the manager to trust those who earn it, and fall back to the "Policy" for those who cannot handle it.

I have worked under both structures, and when you are regularly a top performer, it can be extremely disheartening to be managed as though you aren't. I think manager discretion has its risks, but policies driven by the lowest common denominator has many risks too…mainly ending up with staff of the lowest common denominators.

My #1 complaint about former companies I have worked for are those that punish the many for the actions of a few. In an effort to avoid an uncomfortable conversation with those causing problems, many managers will simply revoke the privileges of all to counter act the issue. This is simply poor management in my opinion.

I have always been a big fan of ROWE (Results Only Work Environment) management for salaried professionals. Don't measure the individual on hours clocked but instead on the work completed. Some people do their best work at 2:00 am while others thrive at 12:00pm. If it gets done, and done well, why does it matter when or where? This has a great side effect of encouraging efficiency, because the employee has a measurable and immediate benefit to working smarter. Otherwise, you end up rewarding efficiency with more work, which unfortunately tends to be the norm.

PTO is always difficult, and there isn't a blanket policy that works everywhere for everyone. I think the more discretion your managers have, the better they can manage.

Anonymous

(CFO)| Oct 31, 2012

A normal PTO policy is needed, at least in the background, for two reasons:

1. To provide a guideline of roughly how much PTO is acceptable. (Is it ok to take two months off each summer and then a few weeks at other times, as long as I check in for messages, and make sure my base work is being performed?), and,
2. To track and indicate whether there is any "credit" next year, for time I didn't take this year.

Some may say that regarding point 1, that by definition it is not important whether people show up at the office at all as long as their work is getting done.

About the only function I can think of where that would be mostly accurate is the sales force due to their very clearly mandated achievement measurement targets. And even in their case there may be an argument of the value of having them available in person for discussions with marketing, finance, and operations, team meetings, etc.

Some may say regarding point 2, that tracking doesn't matter either if the company is on an unlimited, trust and performance based PTO system.

That is, there is of course no "credit" to carry over to next year, no PTO accrual, no payout if an employee leaves, since PTO is made on a going forward decision basis at the discretion of the manager.

The ability of people to "work from home" is clearly greater than it was 10 or 20 years ago. But I would still be cautious about having no guidelines for managers to follow other than their own individual values and whims, and I would be concerned that people think the company is not a very focused and disciplined company, and could attract the type of people who care about getting more time away from work, and take advantage of it.

Granted: Life is uncertain so there will always be a need for management discretion and exceptions.

But as a manager I would appreciate some guidelines and some backing when I tell an employee that taking a two month vacation is just not the guideline norm at this company.

Although we live in an electronic age where physical presence and seat time are not everything, there is still a value to having people physically available as part of the operating team. I see the IT person going towards his car now, so I need to run after him...

I would put a limit on the PTO days, even if it is a high end limit. I am not sure you can ever escape the issue Regis mentions, but it may be mitigated if everyone uses all of their PTO days each year.

Thank you for all the comments so far... I do appreciate them, and there have been multiple other threads here on Proformative about this. However, much of what has been said above is describing the "spirit" of the policy and I agree that a certain culture should probably exist for such a plan to work. Dyn, in fact, a well-known technology company that has instituted such a policy in a pretty public way, has a blog post that sums up their own "spirit" behind their Unlimited PTO policy called "The Truth about Unlimited Paid Time Off" at http://dyn.com/unlimited-paid-time-off-pto-human-resources-benefits-culture-jobs-employees/

However, what I am really looking for is the actual policy behind the spirit of the plan. I am convinced that especially for the big companies doing this, they have some policies out here to prevent blatant abuse, even if just to say "time taken beyond X days is considered an extended leave of absence, etc."

Does anyone have any examples of written policies out there that sit behind the public (or even employee facing) aspects of these policies?

Opinions about the good and bad of these plans are very important but it would be helpful for me to see something in writing, if anyone has one that is real (or close to real) that they would be willing to share with me.

Hey Phil, I would be interested to hear how you treat PTO when someone is terminated. How do you determine how much they have accrued and how to you counter when someone says they are owed more?
Good luck with your policy...I am envious of such a policy.

Matthew, we currently explicitly state in our traditional PTO policy that no PTO is paid out upon termination regardless of the reason for termination. I would just simply state that in the new policy as well, though maybe a bit differently. Also, there is no rollover in our current system and there obviously would be none in the new system. Again we make this very clear in the policy. This prevents year-end accruals and also prevents payout confusion.